The recent decision by France’s Engie to sell its stake in the Touat gas project to Thailand’s PTT Group has raised questions about its economic, legal, and political implications. Algeria’s approval is pending, while tensions between Algeria and France loom over the deal.
The Touat gas project, strategic for Algeria's energy sector, has faced operational and financial hurdles. Delays in production and the COVID-19 pandemic have impacted its performance. For Engie, the decision aligns with its long-term strategy of transitioning away from fossil fuels to focus on renewable energy.
Political Tensions Influence the Decision?
Algerian-French relations have been strained since 2021, rooted in historical and political disagreements. These tensions have spilled over into economic ties, possibly influencing Engie’s decision to exit the Algerian market. Some speculate the move might even reflect France's geopolitical stance toward Algeria.
Legal and Strategic Implications
Under Algeria’s Hydrocarbons Law (Law No. 19-13), any transfer of interests in oil and gas projects requires approval from Algerian authorities. Sonatrach, Algeria’s state energy company, holds a right of pre-emption that allows it to purchase any shares being sold before a third party, such as PTT, steps in.
The decision, expected by Q2 2025, could see Algeria reject the deal if it deems the transfer contrary to its national interests. Additional assurances may also be demanded from PTT to ensure the project's stability.
A Diplomatic and Economic Crossroads
The transaction coincides with diplomatic tensions between Algeria and France, potentially signaling an economic disengagement from Algeria by French companies. If Algeria interprets the sale as a cooling of bilateral ties, it may prompt stricter oversight or rejection of the deal.
Engie’s exit from the Touat project underscores the interplay between economic strategy, legal regulations, and diplomatic relations. Algeria’s decision to approve or challenge the transaction will likely shape not only the future of the Touat gas project but also the broader dynamic between Algeria and France.
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